KPN sells data centre subsidiary in strategic drive

21 May 2019 | Laurence Doe

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Royal KPN N.V. (KPN) has agreed to sell its data centre subsidiary NLDC to a fund managed by DWS, a global infrastructure investment manager, for an undisclosed amount.

The sale is in line with the operator's strategy to simplify its services and focus on core ICT services in its business division and invest in increasing its operational and financial flexibility.

The transaction is subject to regular closing conditions, including regulatory approvals.

After closing the NLDC transaction, KPN will continue to deliver core ICT services such as security, workspace, cloud telephony and hybrid-cloud solutions out of its remaining NLDC data centres in the Netherlands and use public cloud capabilities such as Amazon Web Services and Microsoft Azure.

The deal will not affect NLDC’s data centre services to KPN as a preferred supplier, and services to customers will continue uninterrupted.

NLDC operates a portfolio of six data centres in the Netherlands, with three located in the capital of Amsterdam and the rest in regional hot spots in the cities of Eindhoven, Rotterdam and Groningen.

Maximo Ibarra, CEO of KPN, reported that the operator’s strategy to simplify and digitise had delivered significant cost savings in “an ongoing competitive environment” after the group’s Q1 2019 financial results.

KPN is currently migrating its business division customers and, as of Q1 2019, has migrated 50% of SME customers from traditional fixed voice or legacy broadband services, which has negatively impacted its revenues in the short term.

Its first quarter accounts ended with a negative year-on-year operating profit of 12% on its previous Q1 2018 results, down from €216 million to €189 million.

However, the group also made a “solid start” on its new cost savings program, creating €27 million in net indirect operating savings, a result that was influenced the group’s decision to sell its iBasis wholesale division on February 7, 2019.

The details of another KPN deal, this time involving Huawei for its 5G radio access network, were reported in April, however more agreements are yet to be struck as the operator is planning to use a Western vendor for the 5G core network.